Over the past 6 years, Facebook advertising has gone through some big changes. These changes were mainly influenced by new rules about data privacy and improvements in the platform's machine-learning algorithms.
Andy, the CEO of Growth Catalyst Club, has a lot of experience with Facebook ads. Since 2019, he has spent over $6 million on Facebook ads for different e-commerce and SaaS clients. Because of this, he has seen firsthand how the platform has changed and which strategies work best now compared to before.
In this article, we’ll look at how the platform has evolved based on his insights and advise on how to ensure that your ad campaigns are relevant to the current state of the advertising platform. This is very important as it will help you abstain from using outdated advertising approaches that may limit your earning potential.
The "Wild West" era (2017-2019)
In the early days of Facebook advertising, around 2017-2019, it was a marketer's paradise. Advertisers could scale their spending aggressively using basic interest targeting and retargeting strategies without much concern for optimization or extensive testing. It was easy to see good results without having to plan everything strategically.
During this time, the consumer culture in the United States was also a big factor in Facebook advertising's success. People loved to shop and were drawn to credit card rewards. This aspect increased the performance of ads on the platform. Even businesses with average products could do well.
The main focus of Facebook advertising in this era was on media buying or finding ways to hack the Ads Manager. This involved strategies like:
- Testing a lot of different interests, usually 5 to 30, in each campaign.
- Creating lookalike audiences based on followers, website visitors, purchases, and email lists.
- Using the Facebook Pixel to create retargeting strategies with multiple ad sets in a single campaign.
- Using bidding strategies like bid caps to win auctions.
With these tactics, some advertisers were able to scale their monthly spending from $10,000 to $200,000 in less than a month. Interestingly, there wasn't much focus on testing different ad creatives during this time. Some advertisers would only test 1 to 5 ads per month.
The iOS 14 disruption (2020)
In 2020, everything changed with the introduction of Apple's iOS 14 update. This update had a major impact on Facebook advertising by disrupting third-party tracking (this killed the power of the Facebook tracking pixel) and caused a big drop in ad performance practically overnight. This sudden change sent shockwaves throughout the entire industry, forcing marketers to rethink their strategies. The methods that had previously been successful were no longer effective, leaving advertisers in a state of uncertainty and scrambling to adapt.
The impact of the iOS 14 update was so huge that even shareholders of Meta (formerly known as Facebook) expressed concerns about the future of Facebook advertising. Many companies started switching agencies every 2-3 months in an attempt to find solutions to the new challenges. It became evident that the traditional approach of media buying had reached its limits and could no longer deliver the same results as before.
Dealing with ad tracking and attribution challenges (2020-2022)
After the release of iOS 14, advertisers faced a tough time figuring out how to track and measure the performance of their Facebook ads during 2020-2021. They had to find ways to prove that their ads were working, even though the Ads Manager wasn't showing accurate results. To do this, they tried different methods, including:
- Tracking offline conversions: They wanted to see if people who saw their ads made purchases in physical stores or over the phone.
- Using third-party tools: Advertisers turned to outside tools and platforms that could track conversions in different ways, hoping to get a clearer picture of how their ads were performing.
- Adding special codes to their ad links: They used unique codes in their ad links to gather more detailed information about what people did after clicking on their ads and to track specific actions, like purchases.
- Using advanced AI techniques: Some advertisers used sophisticated AI methods to analyze the overall impact of their marketing efforts, including Facebook ads, alongside other advertising channels.
Despite their efforts, it was time to admit that Facebook advertising had changed significantly, and advertisers had to change their strategies to succeed in this new environment. They had to find creative ways to track and understand the performance of their Facebook ads, and this reshaped how they approached advertising on the platform.
However, this allowed SaaS companies to create and sell Facebook tracking software. One of the popular entrepreneurs who made it big this time was Alex Becker, a former Facebook advertising agency owner and media buyer. He founded Hyros which became one of the biggest Facebook Ads trackers during this time. He later on sold the business for $110 million in late 2022, after just 3 years of launching it.
The current era of Facebook advertising (2023-2024)
Let's fast forward to 2023-2024, and Meta (the company behind Facebook) has made big improvements to its algorithms. They've figured out how to make their algorithms work well even without having access to detailed information about users' interests. They've done a lot of testing and made changes to their platform, and now creative optimization has become the most important factor for success in advertising on Facebook.
Below are the main changes, and optimizations that work currently:
Currently, targeting is mainly done based on the content of the ads themselves. Advertisers can now use a broader audience for their ads. As long as they have a clear goal for their ad's performance and provide enough data for the algorithm to work with, Facebook's artificial intelligence will automatically handle the targeting. While targeting based on specific interests can still be effective for new ad accounts, Facebook's algorithm relies heavily on broader audiences to reach more people.
- Simplifying account structure
Gone are the days of running many campaigns at once, testing different strategies, and using small ad budgets. Nowadays, a simpler approach is more effective. Advertisers should aim to have only one campaign for each specific audience or problem they want to address, and they should conduct their testing within that campaign.
If an advertiser has multiple offers or products, they can start by testing them within a single campaign. However, if the algorithm ends up spending most of the budget on a specific offer, it may be necessary to separate them into different campaigns.
When running ads for products or services that have longer sales cycles, like business software or high-priced coaching offers, it's important to test different types of ads in separate campaigns. This way, advertisers can accurately assess the quality of the conversions they're getting.
- Choosing the right optimization event
Selecting the correct optimization event is crucial for success on Facebook. Meta's machine learning algorithm uses a lot of user data to find people who have taken similar actions or were close to taking actions that align with the optimization event chosen for similar offers.
For example, if a user clicks on a Nike "shop now" ad, they're more likely to see similar ads from competing brands like Adidas. However, choosing the right optimization event can be challenging when promoting products with longer sales cycles.
In such cases, advertisers can do the following:
- Offer a low-priced product to get paying customers and gather data.
- Identify the event in the sales process that has the highest correlation with the desired outcome, and optimize for that event, even if the number of conversions is lower.
If the leads generated from the ads are of lower quality, advertisers can add qualifying questions to the process before the conversion event happens. They can also make sure that the ad copy directly addresses the ideal audience while excluding unqualified leads.
- Ad creative testing and optimization
In the current Facebook advertising space, creative optimization is paramount. To succeed in the ad auction, advertisers must create ads that users engage with, like, and comment on while adhering to ad guidelines. The more engagement an ad receives from a relevant audience, the lower the cost per 1,000 impressions (CPM) will be.
Surprisingly, simple ads that resemble posts from regular users often outperform more polished, promotional ads. There are no definitive best practices, emphasizing the importance of continuous creative testing.
To optimize creative performance, advertisers should consider the following five types of ads based on the audience awareness stage:
- Unaware ads: Targeting problem-unaware audiences and guiding them towards problem awareness and product awareness.
- Problem-aware ads: Addressing audiences who are aware of their problem but not the advertiser's product.
- Solution-aware ads: Targeting people who understand their problem but are unsure which solution to choose.
- Product-aware ads: Focusing on audiences who understand their problem and how to solve it but are undecided on which brand or product to select.
- Most aware ads: Appealing to people who are well-informed about their problem, its solution, and the advertiser's product, and are simply waiting for the right moment to make a purchase.
When starting with a new ad account, Andy recommends analyzing data, competitors, audience insights, and historical performance to develop a quick strategy and begin working on creatives. Rather than getting bogged down in extensive research, it's essential to start testing 20-100 ads in the first month to identify winning messages and offers for specific audiences.
Through this process, advertisers can identify 1-3 messages that consume 80% of the daily budget and can be comfortably scaled. It's important to remember that while Meta ads are a crucial component of the marketing funnel, they are not the only factor. Optimizing the backend, such as upsells and email flows, and maximizing customer value should always be a priority once the front end of the funnel is functioning well.
Conclusion
Facebook advertising has evolved significantly since the "Wild West" era of 2017-2019. The introduction of iOS 14 in 2020 disrupted the industry, forcing advertisers to adapt their strategies and grapple with attribution challenges. In the years that followed, Meta's algorithms have become increasingly sophisticated, shifting the focus from media buying to creative optimization.
Today, success on Facebook lies in creating engaging ad content that resonates with target audiences at various stages of awareness. By continuously testing and refining ad creatives, advertisers can identify winning campaigns and scale successfully.
